Corporate Practice of Medicine & MSO Structures
Laying the Foundation for Your Success
LumaLex Law: Navigating CPOM Laws for Medical & Telehealth Businesses
Many states enforce Corporate Practice of Medicine (CPOM) laws, restricting non-physicians from owning or directly controlling medical practices. These laws are designed to ensure medical decisions remain in the hands of licensed professionals. However, they can create significant challenges for entrepreneurs, investors, and healthcare business owners.
LumaLex Law specializes in structuring Management Service Organizations (MSOs)—also known as PC-friendly structures—to ensure compliance while allowing non-doctors to participate in the healthcare industry legally. Whether you operate a physical clinic or a telehealth business, an MSO structure can provide a compliant, scalable solution.
What is an MSO?
An MSO (Management Service Organization) is a separate legal entity that handles the non-clinical aspects of a medical business. While the licensed medical professionals operate the Professional Corporation (PC) or Professional Association (PA) and make all clinical decisions, the MSO manages administrative, financial, and operational tasks.
Key Functions of an MSO
- Billing & Revenue Cycle Management – Ensures compliance with medical billing regulations and streamlines reimbursements.
- Administrative & HR Services – Manages hiring, payroll, and staff training.
- Marketing & Patient Acquisition – Helps grow the practice while adhering to healthcare advertising laws.
- Technology & IT Support – Provides secure telehealth platforms and electronic health records (EHR) solutions.
- Facilities & Equipment Management – Leases office space and medical equipment to the professional entity.
By structuring your business with an MSO, you remain compliant while benefiting from operational efficiencies and business growth.
State-Specific CPOM Regulations
Understanding CPOM laws in your state is crucial for compliance. Here’s an overview for Florida, California, New York, New Jersey, and Delaware where LumaLex operates:
Florida
Florida does not have laws or court decisions prohibiting the corporate practice of medicine. Physicians and other healthcare providers may be employed by or contracted with corporations owned and controlled by non-physicians.
California
California has strict CPOM laws prohibiting non-physicians from owning or controlling medical practices. However, certain exceptions exist, such as for professional medical corporations where all shareholders are licensed physicians. An MSO can provide non-clinical services to a medical practice, ensuring compliance with state regulations.
New York
New York enforces CPOM laws, restricting non-physicians from owning medical practices. Professional service corporations (PCs) must be owned by licensed physicians. An MSO can manage non-clinical operations, allowing non-physicians to participate in the business while adhering to state laws.
New Jersey
New Jersey upholds CPOM prohibitions, generally restricting non-physicians from owning medical practices. Exceptions exist for certain nonprofit corporations. Implementing an MSO structure enables non-physicians to manage non-clinical services in compliance with state regulations.
Delaware
Delaware does not have explicit CPOM laws, allowing more flexibility for non-physicians to own or manage medical practices. Nonetheless, establishing an MSO can help delineate clinical and non-clinical responsibilities, ensuring clarity and compliance with general corporate and healthcare regulations
Why MSOs are Essential for Telehealth Businesses
With the rise of telehealth, CPOM laws have created unique legal challenges for virtual healthcare platforms. Multi-state telemedicine providers must navigate different CPOM regulations across jurisdictions. An MSO structure enables these businesses to operate legally by providing:
- Scalability – Expand across multiple states while maintaining compliance.
- Flexibility – Support various telehealth models, including asynchronous and synchronous care.
- Legal Protection – Reduce regulatory risk while allowing non-physician ownership of non-clinical services.
A properly structured MSO ensures long-term stability and regulatory adherence for telehealth companies.
Why Hire an Attorney to Structure Your MSO?
Establishing an MSO requires careful legal structuring to avoid regulatory pitfalls and ensure your business model is sustainable. A skilled attorney can help with:
- State-Specific Compliance – CPOM laws vary widely by state. We ensure your structure meets local regulations.
- Contract Drafting – Clear agreements between the PC and MSO are essential to defining roles, revenue-sharing, and decision-making.
- Tax Optimization – Proper structuring can help reduce tax liabilities while maintaining compliance.
- Risk Mitigation – Avoid legal disputes and ensure smooth business operations.
- Licensing & Credentialing – Navigate licensing requirements for telehealth providers across multiple states.
Our firm has extensive experience helping healthcare businesses establish legally sound MSO structures, ensuring compliance while maximizing efficiency.
Get Expert Legal Guidance for Your MSO Today
Whether you’re launching a medical clinic, telehealth business, or expanding your healthcare company, a properly structured MSO is critical to compliance and success.
Contact us today for a consultation and ensure your business is structured for long-term growth.
FAQ
CPOM laws prevent non-physicians from owning or directly controlling medical practices in certain states. These regulations ensure that medical decisions are made solely by licensed professionals.
No, in states with CPOM laws, non-physicians cannot own or control medical clinics. However, they can participate in the business by owning an MSO (Management Service Organization) that handles the clinic’s non-clinical operations.
An MSO is a separate entity that manages the non-clinical operations of a medical practice, such as billing, HR, marketing, and administrative support. This allows non-physicians to invest in the business while staying compliant with CPOM laws.
LumaLex is headquartered in Miami, FL and has additional offices in New York, New Jersey, and California. During your initial consultation, we'll connect you with the right attorney on our team with the most up-to-date expertise in your field—a must for any growth-stage company.
- Ensures compliance with CPOM laws
- Allows non-physicians to invest in healthcare businesses
- Improves operational efficiency and business scalability
- Reduces regulatory risks and legal complications
Setting up an MSO requires careful legal structuring to ensure compliance with state regulations, draft clear contracts, and mitigate risks. Our law firm specializes in structuring MSOs to meet regulatory requirements.